Barclays' reputation suffered another blow this week. The Treasury ordered it to pay £500m in tax that it had tried to avoid, calling the complex schemes it used "highly abusive". The government has now closed the tax loopholes with retrospective legislation. Barclays had signed up to the post-crisis Banking Code of Practice, whereby it undertook not to engage in tax avoidance.
What the commentators said
"It looks terrible," said Patrick Hosking in The Times, especially since Barclays has "spent the past few months sermonising about the importance of good corporate citizenship". Banks' "inability to distinguish between legal and moral responsibilities" was a key cause of the financial crisis, added The Independent. "How little, apparently, has changed."
Still, Barclays is hardly the only "would-be tax avoider", said Alex Brummer in the Daily Mail. Nor is this government the only one cracking down on loopholes. But this process is like the whack-a-mole' game. "Each time you hammer one down, another pops up."
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
It hardly helps matters that the government passed a retroactive law, said Ian King in The Times. "There are few things business people dislike more than retrospective taxes. [These] increase uncertainty and make strategic planning impossible." This sends a "terrible" message about doing business in this country.
"Instead of trying to undo past mistakes," agreed the FT, "the government needs to prevent future ones." The right response to this affair, and to tax avoidance in general, is an "overhaul" of our enormously complicated tax system to make it simpler and fairer thus removing "opportunities for tax arbitrage".
-
FTSE 100 hits record highs – why is it rising and will we see more gains?Advice UK equities have been described as unloved for a long time but as the FTSE 100 hits new highs, we explain if now is the time to buy British.
-
How to invest in copperIt may be time to invest in copper as the red metal appears poised for a big jump. Dominic Frisby looks at what should investors should buy
